Category: zerohedge

World stocks slumped, European assets sold off and the Euro dropped to a three week low on Tuesday after anti-euro comments from an Italian party official sent renewed shockwaves across Europe and the globe, and pushed Italy’s bond yields up to multi-year highs.

Italian asset tumbled for a second day, after the economic head of the ruling League party and head of lower house budget committee – and a well-known euroskeptic – Claudio Borghi said that most of Italy’s problems could be solved by having its own currency: “I am more than convinced that Italy, with its own currency, would be able to resolve its problems,” Borghi said in an interview on Radio Anch’io, adding that the euro as common currency “is not sufficient” for Italy to solve fiscal issues. In kneejerk response, Italian 10Y yield continued their Monday selloff, spiking to 3.438%, the highest level since early 2014.

Borghi also said that like France, Italy shouldn’t be subject to attack from EU officials, adding that if France’s spread started widening, “at a certain point they would raise their hands and say ‘OK let’s intervene’.” He concluded that Italy would have declared a 3.1% budget deficit for 2019 instead of the 2.4% it has set, if it had wanted to go up against the EU, adding that the govt is aiming for a level that’s “enough for our country to feel a bit better.”

Borghi’s comments followed a statement by European Commission President Jean-Claude Juncker who compared Italy with Greece, saying “after the toughest management of the Greece crisis, we have to do everything to avoid a new Greece – this time an Italy – crisis.”

The latest comments shook markets in early trading, pushing Italian 10-year bond yields to a new 4 1/2 year high…

… and shares in Italian banks, which have large sovereign bond holdings, sold off sharply to hit a 19-month low, down 2.8 percent. Italy’s FTSE MIB tumbled as much as 2%, hitting its lowest level in 18 months amid budget concerns, before recouping some of the losses.

Subsequent attempts by Borghi to talk back his comments were unsuccessful, when he told Bloomberg TV that “there is no plan to leave the euro within this government regardless of my personal conviction.” The deficit is “not a revolutionary move” and “we are not mad, we are not Maduro Venezuela or something like this,” Borghi said.

There was little reaction to this subsequent commentary, meanwhile Euro zone banks dropped 1.3% as the comments reignited investors’ anxieties about contagion to euro zone finances from Italy’s higher budget deficit plans, which the government set out on Thursday.

“While our economists do not expect systemic implications for the global economy, contagion risks have risen,” Goldman Sachs analysts warned. “We think European risky assets remain vulnerable and there is potential for negative spillovers to the Euro area given the high trade exposure to Italy.”

In response to Goldman’s caution, the EURUSD continued its selloff for a fifth day, sliding 0.5% and touching its lowest since Aug 21 at $1.1505 and last trading at $1.1517, after hitting 1.18 late last week.

The single currency has been hurt not only by renewed redenomination fears as a result of Borghi’s comments, but also by concerns that a significant increase in the Italian budget will deepen Italy’s debt and deficit problems, and by extension the European Union’s.

“The history of the euro zone tends to be one of great fudges – think of the case of Greece,” said David Keir, manager of the global income and growth fund at Saracen. “But I would caution against any wider systemic spreading. The reality is making kneejerk reactions to big political decisions can very much be the wrong thing to do.”

The Stoxx Europe 600 Index fell for only the second time in six days as equities in Italy declined. Amid the risk-off mood the dollar climbed against almost all its major peers and emerging-market assets dropped. The pound fell as Brexit and the annual conference of the governing Conservative Party continued to dominate headlines.

Meanwhile, as Bloomberg’s Garfield Reynolds observes, Italy’s budget woes once again threaten to blow up EM FX as “the blowout in BTP-bund spreads is hammering the euro and also hurting risk proxies such as AUD and NZD.”

“That threatens to send a fresh wave of contagion across EM assets just as investors were hoping they had got past the aftershocks from the crises in Turkey and Argentina.” Reynolds wrote in a Tuesday note. “A fresh burst of USD strength will be most unwelcome, with the KRW’s late slump a sign of things to come. Each Italian yield eruption makes it that much harder to conclude that this European sovereign debt dilemma won’t end in tears. It also will keep investors cautious and avoiding volatile plays, like EM assets.”

Sure enough, also overnight Indonesia’s rupiah weakened past 15,000 per dollar for the first time in 20 years as sentiment toward emerging-nation assets soured and oil prices jumped. The currency has tumbled almost 10% this year as rising U.S. interest rates have boosted the dollar and Indonesia’s current-account deficit has left the economy exposed to the financial turmoil that afflicted Turkey and Argentina. Crude prices have almost tripled since February 2016, ratcheting up the cost of imports. The currency plunge is taking place even as the central bank has raised interest rates five times since May to shield the currency from the emerging-market rout.

“Given the rise in U.S. interest rates, higher oil prices which may see a wider trade deficit, and a stronger dollar in recent days, it was proving difficult for Bank Indonesia to hold the line at 15,000,” said Khoon Goh, head of research at Australia and New Zealand Banking Group Ltd. in Singapore. “If sentiment doesn’t improve, we risk further weakness towards the 15,200 region.”

Earlier in Asia stocks in Hong Kong underperformed as traders returned from a long weekend, and equities also fell in Australia and South Korea. Japan was a bright spot as the Nikkei 225 Stock Average ticked up a day after closing at its highest since 1991. China’s financial markets remain closed for the week of Oct. 1-5 for national holidays, but China’s weaker manufacturing PMI surveys over the weekend also hit Hong Kong stocks.

As Bloomberg notes, “while a deal between the U.S. and Canada to revamp the Nafta trade deal with Mexico gave global risk appetite a boost at the start of the week, investor sentiment remains fragile amid a laundry list of threats to markets.”

Also overnight, Sino-American tensions were back in focus after the Chinese navy came within 45 years of a US Misile Destroyer from waters near South China Sea islands, in Beijing’s account of the incident. Meanwhile, political drama in Washington still swirls around President Donald Trump’s Supreme Court nominee, which may feed through to November congressional elections and affect the outlook for the administration’s agenda.

As a result of the renewed Italian jitters and the last minute renewal of the NAFTA 2 deal, the dollar traded at a three-week high, weighing on emerging markets stocks which suffered their biggest one-day losses in a month. The greenback drew support from an uptick in U.S. Treasury yields as Wall Street gains curbed demand for safe-haven debt, although so far the 3.11% level has proven insurmountable for 10Y yields, which were down 3bps on Tuesday morning.

Elsewhere, oil prices recoiled slightly, having hit nearly four-year highs in the previous session. Crude contracts surged nearly 3% to $75.77 a barrel on Monday, the highest since November 2014, as the deal to salvage NAFTA stoked economic growth expectations, with impending U.S. sanctions on Iran seen raising prices. Brent crude edged down 0.2 percent to just under the $85 a barrel level, after rallying 2.7 percent the previous day to a $85.45, highest since November 2014.

Expected data include Wards total vehicle sales. Lamb Weston, Paychex, and PepsiCo are among companies reporting earnings.

Market Snapshot

• S&P 500 futures down 0.4% to 2,921.50
• STOXX Europe 600 down 0.7% to 381.39
• MXAP down 0.7% to 163.74
• MXAPJ down 1.6% to 516.20
• Nikkei up 0.1% to 24,270.62
• Topix up 0.3% to 1,824.03
• Hang Seng Index down 2.4% to 27,126.38
• Shanghai Composite up 1.1% to 2,821.35
• Sensex up 0.8% to 36,526.14
• Australia S&P/ASX 200 down 0.8% to 6,126.21
• Kospi down 1.3% to 2,309.57
• German 10Y yield fell 4.4 bps to 0.427%
• Euro down 0.5% to $1.1526
• Italian 10Y yield rose 14.9 bps to 2.93%
• Spanish 10Y yield rose 1.1 bps to 1.541%
• Brent futures down 0.4% to $84.61/bbl
• Gold spot up 0.4% to $1,193.94
• U.S. Dollar Index up 0.3% to 95.61

Top Overnight News

• Italian Finance Minister Giovanni Tria’s effort to promote his government’s new fiscal strategy ended in failure on Monday, with the head of the European Commission warning of a Greek- style crisis and the nation’s bonds dropping to their weakest level in more than four years. The euro slipped alongside Italy’s bonds on Borghi’s earlier comments
• President Donald Trump looks to be preparing for a potentially protracted economic war with China. He’s recently struck a last-minute deal with Canada and Mexico, signed a trade agreement with South Korea and convinced Japan to begin bilateral economic negotiations. The North American accord also includes provisions seemingly aimed at keeping Chinese products out of the region.
• Former foreign secretary Boris Johnson will arrive at the Conservative Party’s annual conference on Tuesday to make a speech that shows whether he still has a chance — or the will — to gun for the top job in British politics and be prime minister of a party at war with itself.
• Randal Quarles, the Fed’s vice chairman for supervision, is vying with the head of the Dutch central bank, Klaas Knot, to lead a watchdog panel for the global financial system — Basel- based Financial Stability Board — after Mark Carney steps down on Dec. 1.
• Indonesia’s rupiah weakened past 15,000 per dollar for the first time in 20 years amid a souring of sentiment toward emerging-nation assets and as oil prices jumped.

Asian stocks traded mostly lower as the upbeat sentiment from the USMCA deal seen on Wall St. faded away and trade concerns re-emerged after White House Economic Advisor Kudlow said a trade deal between US and China is not “imminent”.ASX 200 (-0.8%) was dragged lower by the financial sector as Australia’s big four traded with losses in excess of a percent after the ACCC said they will examine the banks, while Nikkei 225 (+0.1%) was cushioned on the back of currency effect. Elsewhere, Hang Seng (-2.4%) underperformed as participants come back from the long weekend to downbeat trade comments from the US, meanwhile KOSPI (-1.2%) was also weighed by the sour sentiment as the index shrugged off optimistic industrial production data. China’s narrowing interest rate spread with the US and declining current account surplus have led to some concerns regarding capital outflow. BoJ’s September Tankan Corporate Price Expectation Survey stated Japanese firms sees Y/Y inflation at 0.8% (Prev. 0.9%); 3yr and 5yr expectations unchanged at 1.1%.

Top Asian News

• Rupiah Weakens Past 15,000 per Dollar for First Time Since 1998
• China Gas Distributors Sink as Connection Fee Cuts Seen Planned
• ASM Pacific Jumps as TCL Is Said Weigh Bid for $1 Billion Stake

European equities have started the day in the red. This comes after suggestions from Italian Lawmaker Borghi hinting that the country would be better off leaving the Euro. Despite an intention to leave the Euro later denied by the Deputy PM, Italian assets are seeing significant losses, with Italian Bank stocks down over 2%, and the FTSE MIB once again at the bottom of the index pile. The financial sector is lagging its peers due to the weakness in Italian banks, with the energy sector outperforming off the back of oil prices hitting 4 year highs. The FTSE is the outperforming bourse off the back of a Brexit-hit GBP, but is trading in negative territory. The index is being pressured by a collapse in Royal Mail shares after a guidance cut in Monday’s trade, with the co. extending losses in the European morning. The stock is now at the foot of the Stoxx 600 and has hit the lowest level in its lifetime.

Top European News

• Akzo to Hand Out $6.4 Billion More to Investors After Split
• Cinven Is Said to Plan Raising 8 Billion Euros for New Fund
• Church Pedophilia Film Sets Box Office Record in Catholic Poland
• Russian Oil Output Rises to Record as OPEC Cuts Rolled Back

In FX, the EUR is not the biggest G10 loser vs a generally firm USD, as the DXY rebounds to just over 95.700 amidst broad Dollar gains vs rivals, bar the safer-havens, but has been centre stage since Tuesday’s EU ‘open’ following more  Italian budget headlines underlying a defiant stance on the 2019 deficit. Indeed, members of the coalition insist that the proposed 2.4% target is fixed ahead of another budget meeting and presentation to parliament on Wednesday, while the League party’s Borghi contends that the Government would have set the bar even higher at 3.1% if it really wanted to take on the EU, adding that the country’s fiscal problems could be solved if it was not in the Eur club. GBP was another major  underperformer amidst a raft of Brexit commentary from the Tory conference, but accelerating to the downside once stops were tripped on a break of 1.3012 in Cable and that pairing failed to keep hold of the 1.3000 handle. However, the Pound was also undermined by a weaker than forecast headline UK construction PMI and is currently eyeing bids ahead of 1.2950. CAD: The Greenback’s resurgence has eroded more USMCA-inspired Loonie (and Peso) gains, with Usd/Cad rebounding a bit further above 1.2800 having held above key/strong technical support yesterday. EM – Losses across the board vs the Usd as recent recovery momentum stalls and reverses on largely negative external factors rather than anything new detrimental in the region. Indeed, even the Rub is weaker around 65.5000 and not deriving any support/impetus from the latest spike in oil prices

In the oil market, WTI is hanging around the USD 75.40/BBL level and unchanged for the day after the benchmark hit four-year highs in early European trade. Production figures were released from Russia for September, who said this stood at 11.36mln BPD vs. 11.21mln BPD in August. In the metals sector, gold is marginally in the green as the yellow metal has caught a safe-haven bid in the Italy driven risk-off tone. Copper prices have fallen for the second straight session after slowing growth in the Chinese manufacturing sector has continued to stoke concerns over demand for the construction material.

The day ahead is a fairly sparse one for data releases. In the US, the only release of note is September vehicle sales data. It is however a busy day for central bank speak. Over at the BoE both Carney and Haskel are due to chair panels at a conference in London this morning while the ECB’s Villeroy de Galhau is due to make a speech this afternoon at an OECD event. Meanwhile the Fed’s Quarles is due to testify before the Senate banking committee this afternoon after which Fed Chair Powell speaks at a NABE meeting discussing the outlook for the labour market and inflation. Dallas Fed President Kaplan is also due to speak in the evening at a separate event.

US Event Calendar

• Wards Total Vehicle Sales, est. 16.8m, prior 16.6m
• 10am: Fed’s Quarles Testifies to Senate Banking Committee
• 12:45pm: Fed’s Chairman Powell Speaks at NABE Conference in Boston
• 2pm: Fed’s Kaplan Speaks in El Paso

DB’s Jim Reid concludes the overnight wrap

Morning from the US. I’m en route to our annual Leverage Finance conference in Phoenix. It’s one of the largest if not the largest in the industry and a major gathering for investors and issuers each year. If you’re attending Wednesday and want to say hi please let me know. I landed in NY yesterday and after 23 years and 50 plus business trips here I finally tried the subway as a way of getting from JFK to downtown Manhattan to avoid chronic car sickness. Apart from getting lost, missing the express train connection to Penn St, changing trains 3 times and taking nearly 2 hours, it was a journey where my stomach remained becalmed. I love NY but the combination of bumpy roads, taxi drivers’ lack of finesse and the stop start traffic (mostly a jerky stop) makes this journey my most feared anywhere around the world. The subway it is from now on.

Staying in the US, NAFTA – or should we say USMCA – politics won out over Italy and Brexit politics yesterday in what ended up being a mixed start to the week. The S&P 500 and DOW ended +0.36% and +0.73% respectively last night, while the NASDAQ and Russell 2000 of small cap stocks underperformed, closing -0.11% and -1.39% respectively. It was the sharpest day of small cap underperformance in seven years. The STOXX 600 had earlier closed +0.20% in Europe, with energy stocks leading gains as Brent crude oil eclipsed $85 and to a new four-year high. The Canadian Dollar (+0.73%) strengthened versus the Greenback while bond markets ended up flat to slightly higher in yield, as markets priced in another 10 basis points of Bank of Canada rate hikes through end-2019. The Mexican Peso retraced gains of +1.14% to close flat, while the Argentine Peso had its second-best day of the year, gaining +4.63% as the central bank recommitted to tightening policy. Last night 10y Treasuries finished +2.2bps higher and Bunds ended flat while the rest of Europe was broadly 2 to 3bps higher. Sterling – which ended broadly unchanged at the close last night – had a fairly roundabout session meanwhile trading as high as +0.80% from the day’s lows following headlines suggesting that PM May was preparing to compromise on the Irish border situation. More on that shortly.

Elsewhere, it wasn’t quite the underperformance of Friday but Italian assets were again struggling to keep up. The FTSE MIB finished -0.49% while 2y and 10y BTP yields rose 29.4bps and 15.2bps respectively following a bit of a late session sell-off. Italian Banks (-3.05%) fell again meaning the 2-day move of -10.09% is the biggest since Aug-16 (-10.62%). This all came after criticism at a meeting of finance ministers in Luxembourg. France’s Le Maire said that budget restrictions for all EU member states must be respected by everyone while European Commissioner Moscovici said that Italy’s budget is a “very, very significant deviation from its previous projections and almost certainly violated the rules”. Dutch Finance Minister Hoekstra added that “the signals we’ve been getting so far aren’t very reassuring” while in the evening EC President Juncker warned of needing to do everything to “avoid a new Greece crisis”. Markets have been waiting for comments from the Eurozone and it’s unlikely that this is the last we hear but the next material event for markets is the approach itself from the Europeans – i.e. how quick and harsh the response is.

Back to the US, where President Trump announced a new trade deal with Canada and Mexico, which he called “the most important trade deal we’ve ever made, by far.” The agreement adjusts the existing NAFTA framework with marginal changes, and the impact should be relatively limited, though the removal of a key source of uncertainty should be beneficial to businesses in all three countries. With access to US markets secured, further trade conflict between the US and China could end up benefiting Canada and Mexico, as their exporters may be able to seize market share. Such an escalation looks likely, with Trump reiterating his preference for using tariffs, saying that they were the key catalyst that brought Canada and Mexico to the negotiating table.

The positive Brexit news yesterday was that Prime Minister May was said to be considering allowing regulatory checks on goods to take place between Northern Ireland and the UK mainland. Previously, May had rejected any barriers within the UK. In return for this concession, media outlets reported that May will aim for the whole of the UK to remain within the EU’s customs union as the backstop agreement. It’s not clear if this will be acceptable to May’s coalition partners in the DUP or to the more zealous Brexiteers, and the pound retraced it’s 0.80% intraday moves relatively quickly.

Overnight it’s been another fairly quiet session in Asia with performance across bourses also mixed. The Nikkei (+0.18%) has built on its 27-year high however the Kospi (-0.69%) and ASX (-0.73%) are both lower. The Hang Seng (-1.61%) has also reopened with a sharp decline. As a reminder bourses in China are closed this week. Elsewhere futures in the US are down slightly while currencies in Asia are generally lower led by the Indonesian Rupiah (-0.66%) and South Korean Won (-0.48%).

In other news, the final September manufacturing PMI revisions that were out around the globe yesterday didn’t reveal any great surprises. The Eurozone reading was confirmed at 53.2 which was a very modest downward revision from the 53.3 flash print. Germany and France were unrevised at 53.7 and 52.5 respectively while Italy came in slightly below expectations at  50.0 (vs. 50.2 expected) and the lowest since August 2016. Spain printed at 51.4 and also soft relative to expectations for 52.6. Meanwhile the UK surprised to the upside (53.8 vs. 52.5 expected) although the report did sound a little bit more downbeat about medium term expectations for the sector pointing to both supply constraints and Brexit uncertainty. Later in the day the US PMI was unrevised at 55.6. Shortly after that, we got the September ISM manufacturing report in the US. The 59.8 reading was a shade below expectations for 60.0 but still the third highest reading this year and above the six-month moving average of 59.2. Interestingly, the prices paid component was much softer (66.9 vs. 71.4 expected) however the employment component (58.8 vs. 58.5 expected) was still strong and indicative of a solid read-through to the employment report this Friday. So still a robust growth outlook, though ISM respondents said they were “overwhelmingly concerned” about the latest tariffs on imports from China.

That generally solid set of data at least appeared to overshadow any negative read through from comments by the IMF’s Christine Lagarde yesterday. Lagarde said that risks the IMF had highlighted six months’ ago “have begun to materialize” and suggested that global growth forecasts are likely to be cut when the fund updates its World Economic Outlook on October 9th, warning also of trade wars and tighter credit. Currently, the IMF’s 2019 global growth forecast is for 3.9%, marginally higher than our economists’ forecast for 3.7%.

Finally, the day ahead is a fairly sparse one for data releases. This morning in Europe we’ll get September house prices data in the UK followed by the August PPI report for the euro area. In the US, the only release of note is September vehicle sales data. It is however a busy day for central bank speak. Over at the BoE both Carney and Haskel are due to chair panels at a conference in London this morning while the ECB’s Villeroy de Galhau is due to make a speech this afternoon at an OECD event. Meanwhile the Fed’s Quarles is due to testify before the Senate banking committee this afternoon after which Fed Chair Powell speaks at a NABE meeting discussing the outlook for the labour market and inflation. Dallas Fed President Kaplan is also due to speak in the evening at a separate event.

via RSS https://ift.tt/2Nhv8Yi Tyler Durden

Authored by Lord Keith Maginnis of Drumglass, op-ed via The Daily Caller,

This is the reality: 

A career diplomat crossing European borders in a rented car while carrying a professionally-made bomb, which bears a design favored by jihadists.

In Luxembourg, he hands over the bomb to two would-be terrorists, long-standing residents of Europe who just look like any ordinary young married couple.

They accept it with a clear mission in mind: to bomb a political rally in the largest convention center in France, located in the suburbs of Paris.

If the plot is successful, it will kill many among the tens of thousands of people in attendance, among who were hundreds of dignitaries and parliamentarians from the United States, Europe and the Middle East.

The couple put the bomb in the trunk of their Mercedes and the woman hides the detonator in her make-up bag. They head off toward the rally.

This may sound like the opening sequence of the latest James Bond film, but the chilling reality is that this really occurred in June.

The explosives expert who doubled as a career diplomat is a real person called Assadollah Assadi – he is presently detained in Germany while the recipients of his bomb and one other operative are in jail in Belgium.

With the prospective bombers having been stopped by Belgian authorities at the French border and the bomb being harmlessly detonated by special army units, this incident had a fortunately happy ending, but…

Assadi himself narrowly failed to escape back to Austria, where he enjoys diplomatic immunity in line with his multiple years of work in the Iranian embassy. Consequently, it appears likely that he may face justice for his attempts to facilitate the mass killing of Iranian expatriates and their Western supporters.

But as with any fictional spy thriller, the given scene is only the prologue. It surely defines a larger challenge involving similar terrorist threats at the heart of Europe. Will it, however, be a fight that is resolved through political and diplomatic channels with appropriate press intervention or will Europe casually succumb to a saga of Manchester-type terrorist outrages.

In the aftermath of the arrests, a spokesperson for the Belgian judiciary remarked that nearly every Iranian diplomat in Europe is, in fact, like Assadi, is an operative of the Iranian secret services, working and residing in Europe as a sort of sleeper cell.

The National Council of Resistance of Iran (NCRI) — the organisation behind the rally that Assadi’s terrorists were targeting — was quick to echo this sentiment and to recommend that the nations of Europe prosecute the arrestees to the fullest extent of the law and then proceed to investigate and expel other potential terrorist diplomats throughout Europe.

The U.K. set a potential precedent with Russian terrorism in Salisbury but has, almost dismissively, sought to ignore this Iranian-backed conspiracy… the press has been unstirred by the lack of blood on the carpet!

Overall, the European response to the foiled terror plot has been muted so far, even though the incident on the French border was neither the first nor, potentially, the last of its kind.

In March, authorities in Albania arrested two Iranian operatives who were planning a terror attack on the residence of more than 2,000 members of the People’s Mojahedin Organisation of Iran (PMOI/MEK), the main constituent group in the NCRI coalition.

The prospective targets had been relocated to Albania in 2016 after the Iranian regime and its regional proxies failed to destroy the PMOI community in Iraq before it was relocated under UN supervision to safer territory.

The arrival of PMOI leaders in Albania spurred a dramatic expansion in the number of diplomatic personnel at the Iranian embassy. Surely this leaves little doubt about the role of such embassies as part of the regime’s terrorist infrastructure.

As such, it underscores the need to address that persistent threat, and to at least, listen to the advice of the PMOI and the NCRI in pushing Iranian “diplomats” out of Europe altogether.

But it bears noting that this course of action would not exactly eliminate the Iranian terror threat. In August, two other Iranian operatives were indicted in the United States for spying on individuals and groups associated with the NCRI.

The indictment against them suggests that the defined purpose of this intelligence gathering was to carry out attacks against dissidents inside the United States, a country that has not had diplomatic relations with Iran since the immediate aftermath of the Islamic revolution.

Combating the Iranian terrorist threat begins with a broader severance of diplomatic ties, but it ends with coordinated, multilateral pressure by all the peaceful, democratic nations of the world, involving economic sanctions, international criminal proceedings, and more.

The United States called on the international community to adopt relevant strategy to counter Iran’s terrorist activities at a meeting of the United Nations Security Council and at the U.N. General Assembly last week.

Although European nations may be disinclined to listen to the American sales pitch on this topic, they would do well to think back on recent close calls involving Iranian terrorism on European soil. With this in mind, it would surely be criminally negligent to disregard the appeal for adequately co-ordinated pressure on the Islamic Republic. There is simply too much at stake.

via RSS https://ift.tt/2IyOsiY Tyler Durden

Germany’s right-wing Alternative for Germany (AfD) party has surged in popularity to become the country’s second most popular party behind Merkel’s Bloc. 

While one recent poll commissioned by Germany’s Bild am Sonntag newspaper has the party at 18% support, a Monday INSA Poll has the party at 18.5% – an all time high. 

Germany: Right-wing to far-right AfD (EFDD) reaches all-time record high: 18.5% (INSA poll). #btw21

— Europe Elects (@EuropeElects) October 1, 2018

Coming in third is the Social Democratic Party of Germany (SPD) at 16% popularity.  

AfD’s popularity is the latest sign that the populist wave sweeping Europe continues to pick up steam, as Europeans steadily reject open-border globalism and other progressive policies. Critics on the left suggest that the party is simply catering to public fears and frustrations over migrants. 

AfD politicians are regularly accused of extremism and don’t shy from the type of nationalist rhetoric that mainstream German politicians largely have shunned since World War II. After launching in 2013, Alternative for Germany has grown powerful by focusing especially on the public’s fears and frustrations over the country taking in record numbers of migrants and refugees in recent years. –NPR

AfD’s supporters disagree – while the party believes it is in touch with German society. “On the crucial issues of our time, the views of the majority of the population coincide with ours. That drives these people to us,” AfD spokesman Jörg Meuthen told NPR, adding that accusations that the party’s members are dangerous right-wing radicals are “an expression of political helplessness.” 

Meuthen – a German member of European Parliament and an economist, says that the party’s leaders “completely reject any form of right-wing radicalism.” 

That said, members of AfD were seen marching in solidarity with anti-migrant group PEGIDA as well as neo-Nazi activists who were seen performing Nazi salutes – which are illegal in Germany, while shouting “foreigners out!” 

Liberals are scratching their heads over the rise of AfD – suggesting that it’s a product of insecurity. 

So, how has the AfD managed to garner so much support for its “alternative” for the country?

According to Werner Weidenfeld, a political scientist at the University of Munich, the party appeals to a variety of sectors. “The AfD supporters are not all right-wing radicals,” he says. There is a range of backers, including “disappointed middle-class” citizens and “some right-wing extremists.“

He thinks the AfD’s success reflects people’s longing for simple solutions to complex issues, like security and artificial intelligence. “We live in an age of complexity,” he says, “while at the same time nobody explains the complex connections. So there is confusion, and people become incredibly insecure. They are frustrated, afraid and want a simple answer.” –NPR

Over 1 million asylum-seekers came to Europe beginning in 2015, mostly from Syria, Afghanistan and Iraq, after Angela Merkel opened the country’s borders. German conservatives have have levied heavy criticism over the policy, and locals have grown frustrated at spiking crime rates blamed on migrants.

“So there is a valve for the frustration and anger over the prevailing political style,” says media scientist Jo Grobel, adding that as long as the party continues to focus on migration, it can harness Germans’ “shared anger.”

And while Europe’s establishment parties are still in control, winning elections – they have given up a lot of ground as populist parties make considerable gains. 

“There is no singular explanation for the strengthening of the extreme right — it is a worldwide phenomenon,” says German parliamentarian Konstantin von Notz from the liberal Green Party. “The far right and autocrats have an international network and see themselves as a movement. This threatens the Western-type democracies massively, whose freedoms we have taken for granted for decades.” 

Liberal German also blame social media for the rise in right wing populism – particularly Facebook. 

“It consequently built its party structures along the network and uses it better than any other party,” says Political consultant Martin Fuchs. “both in terms of connecting [supporters] to the party, as well as the implementation [of its political agenda] with emotional content, escalating scandals, focusing on one topic and managing its community.”

The government is aware it needs to improve its appeal to citizens. “The public perception of the government needs a lot of improvement,” says Johannes Kahrs, a member of parliament for the Social Democrats, a partner in the ruling coalition. “Trust calms, a lack of trust gives a boost to the extremists.”

He says to combat the appeal of the AfD, traditional parties “need [to offer] guidance and we need to solve problems.” But he insists politicians should not adopt far-right positions: “There should be no attempt to overtake the far right on the right.” There has to be a clear limit to what is acceptable in German politics and society, Kahrs says. –NPR

 In other words, the left can’t meme. 

via RSS https://ift.tt/2y5uGHb Tyler Durden

Just days after Europe unveiled a “special purpose vehicle” meant to circumvent SWIFT and US monopoly on global dollar-denominated monetary transfers – and potentially jeopardizing the reserve status of the dollar – Iran said it was finalizing mechanisms for the oil trade to bypass US sanctions against the country, said Iranian Deputy Foreign Minister Abbas Araghchi.

According to RT, Araghchi said that Tehran is not ruling out the possibility of setting up an alternative to the international payments provider SWIFT to circumvent sanctions imposed by Washington.

“As we know, Europeans are also trying to see how SWIFT can continue working with Iran, or if a parallel [financial] messaging system is necessary… This is something that we are still working on,” Araghchi said.

According to the Iranian diplomat, the independent equivalent of the SWIFT system that was earlier suggested by the EU to protect European firms working in Iran from US sanctions will be available for third countries.

“This is the important element in SPV (Special Purpose Vehicle) that it is not only for Europeans but other countries can also use this. We hope that before the re-imposition of the second part of the US sanctions [from November 4], these mechanisms can be in place and be functional,” said the official.

One can see why: the Iranian economy has been hit hard in recent days, and the Rial has plunged to all time lows, amid fears that the sanctions will cripple Iran’s most valuable export resulting in a shortage of hard currency, eventually leading to a replica of Venezuela’s economic collapse.

Separately, Iran’s Foreign Ministry spokesman Bahram Qassemi said that “after much negotiation over a clear mechanism with Europe, we have neared certain understandings; and for sure, US sabotage in that regard will fail.”

On September 24, Iran and its five partners released a joint statement announcing the setting up of a “Special Purpose Vehicle” to facilitate continued trade with Iran, bypass the US’s financial system, and avoid any impact of America’s secondary sanctions. That statement did not provide details. And EU foreign policy chief Federica Mogherini said technical talks would ensue.

Qassemi said details would remain undisclosed to protect national interests and to preempt potential attempts to undermine  Iran’s work with its partners. But he did say “the mechanism for cooperation” was being finalized.

The Iranian spokesperson also said Iran would ultimately decide whether its demands have been met in practice.

“If, ultimately, and for whatever reason, the European Union and [our] other partners fail to provide the necessary guarantees to us, that can influence Iran’s decision, and the Islamic Republic will follow the path that is expedient for the country,” he said.

Meanwhile, while throwing a wrench in the works, the Trump administration has been quietly testing out Iran with requests for new negotiations. Tehran has ruled out any talks with the Trump White House because of its unlawful exit from the nuclear deal — which was turned into effective international law via United Nations Resolution 2231 back in 2015 — and has said Washington must return to the deal before any talk of negotiations.

Last week, EU Foreign Affairs Chief Federica Mogherini confirmed that the EU signatories remain committed to the nuclear deal with Iran and are working to create special payment channels to do business with the Islamic Republic.

While Brussels stands by the pact signed in 2015 between Tehran and the world powers, the EU had to enforce the ‘Blocking Statute’ in order to safeguard European businesses operating in Iran from US sanctions against the country. However, the measure failed to keep European majors like Total, Maersk, Mercedes in Iran, as they cannot function independently of the US-dominated international banking system and international financial markets.

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Addressing his parliament on Monday, Turkish President Recep Tayyip Erdogan lashed out at the United States over sanctions against Turkey and Iran, which have served to squeeze both countries and resulted in massive inflation. Crucially, he remained defiant over the case of evangelical pastor Andrew Brunson, which have plunged ties with Washington to their lowest, saying the preacher of has “dark ties with terror”.

“The US has embarked on a false path of solving political problems not through negotiations, but through the language of blackmail and threats,” Erdogan said in a speech. Though the public Ankara-Washington back and forth over the 2-year detained Brunson’s fate throughout the summer appeared to have cooled down over the past month, Erdogan directed his ire at the Trump White House, which he said “lost its credibility engaging in a trade war with the world” in reference to recent sanctions hitting Russia, China, Iran, and Turkey. 

Erdogan vowed that Turkey will fight within legal and diplomatic frameworks, saying it will not back down on Brunson matter, but that it will persevere through “this crooked understanding, which imposes sanctions using the excuse of a pastor who is tried due to his dark ties with terror organizations.”

However he still held out hope that “the US leadership will sooner or later change its wrong attitude towards our country” and that bilateral relations will normalize in the future. 

He also particularly highlighted Washington’s “unfair” pulling out of the 2015 Iran nuclear deal last May: “It’s absolutely wrong to use sanctions when all the issues can be easily solved through monitoring, carried out by the international organizations,” he said. He further explained the domino effect this has set off for all neighbors in the region. 

“It’s paramount for us that Iran isn’t isolated from political decisions that shape the future of the region,” Erdogan said, and added that the Turkish economy “is strong enough and will not to succumb to threats and attacks” by the Americans.

Of course, no Erdogan speech could possibly leave out the Kurdish issue either: the Turkish president charged Washington on this front with “continuing to cooperate with terrorist organizations.” He reiterated the longstanding goal of completely eradicating PKK-linked groups from Iraq and Syria — the bulk of which the US is directly aligned with. 

Perhaps seeking to cool or at least pause tensions last week while attending the United Nations General Assembly, Erdogan had noted that Pastor Brunson’s fate is a judicial matter, distancing himself from the contentious issue which effectively led to a summer long diplomatic war with Washington, resulting in the Turkish lira losing more than 45 percent of its value this year.

In comments made last Wednesday, he said “As the president, I don’t have the right to order his release. Our judiciary is independent. Let’s wait and see what the court will decide.” Erdogan also claimed the severely ailing economy had nothing to do with the diplomatic feud with the US: “The Brunson case is not even closely related to Turkey’s economy. The current economic challenges have been exaggerated more than necessary and Turkey will overcome these challenges with its own resources,” he claimed. 

But Monday’s speech before parliament is likely an attempt to save face domestically while simultaneously negotiating with Washington. 

According to a recent report detailing the status of Pastor Brunson’s case in Middle East Eye:

But the shrill tone and tit-for-tat tariff slapping has lulled lately.

The calm, according to a Turkish diplomat, comes after Ankara, under pressure to stem the country’s economic freefall, told Washington that the conflict could only be resolved if the public squabbling stopped.

The Turkish diplomat cited in the report said further, “We knew we had to solve the problem and normalize our relations with the US for the sake of Turkey’s economy, but it was not possible to do that amid challenging statements.” He continued, “So we both decided to prevent any more escalation and solve the problem quietly.”

Brunson is due in court October 12 and has recently been placed under house arrest pending trial — a concession made by Turkey after Congress voted to halt sale of Lockheed Martin produced F-35 stealth fighter jets — which proves Turkey is willing to bend. 

Likely, Erdogan’s bark as presented before his own parliament is much worse that his bite in dealing with US officials. 

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Authored by Andrew Spannaus via ConsortiumNews.com,

A Genoa bridge that collapsed last month killing 43 people is privately owned, but a key factor that has slowed basic infrastructure investment in Italy in recent years is the fault of the EU…

A little over a month ago, on August 14, a highway bridge collapsed in the middle of the Italian city of Genoa, killing 43 people, damaging the populated areas below, and interrupting a major traffic artery connecting the two sides of the city. The bridge had been built in the 1960s, with a construction technique that had been criticized by some experts over the years, and its decay was obvious; it had already undergone various repairs, and a new round of extraordinary maintenance was planned for this fall.

The maintenance didn’t come in time. As heavy rain fell in the area, cars and trucks dropped from a height of 150 feet, causing death and injury, and marking a national tragedy that has gripped the country.

Why did this happen? Italy’s highway company was privatized in 1999, and concessions were then granted to operate the roads. The largest concession-holder (with about 50% of the network) is currently Autostrade per l’Italia S.p.A., controlled by the Benetton family, founders of the eponymous fashion brand. They make a handsome profit off of highway tolls – among the highest in Europe – and they are responsible for maintenance and investments, which have stagnated even as tolls have more than doubled in the past 25 years.

Autostrade’s defense in regard to the disaster is that while concerns had been raised about the bridge, there was no indication of imminent danger. It’s a weak argument, considering that in Genoa the bridge had been the subject of public debate for years, with some seeing it as “a disaster waiting to happen.” After initial resistance, Autostrade ultimately responded to public pressure by allocating 500 million Euros (575 million dollars) to compensate the families of the victims and rebuild the bridge.

Collapsed Bridge: Privately owned. (Wikimedia Commons)

The first response from Italy’s populist government led by the Five-Star Movement (M5S) and the League, was to channel rage against the private company, using popular arguments against the neoliberal policies of privatization and budget-cutting. They are right, of course, that the disaster came on the watch of a private company, which is claimed to be more efficient than the public sector. Italy’s highway system works fairly well, but there’s no ignoring the need for upgrades to the parts of the infrastructure that were built during the economic boom of the 1950s and 60s, which have reached the end of their useful life.

Yet tolls are already high, and the private concessionaire wants to guarantee its profits; who’s going to pay for all the work that needs to be done?

The two Deputy Prime Ministers of the Italian Government, Luigi Di Maio of M5S and Matteo Salvini of the League, have led the charge against Autostrade. Di Maio has threatened to revoke the concession and re-nationalize the highways, although the institutional pushback has been strong. Salvini, on the other hand, immediately pointed the finger at European Union (EU) budget constraints: “Investments that save lives… must not be calculated by the strict, cold rules imposed by Europe”, he said on Aug. 15.

EU Hinders Infrastructure Funding 

The disaster in Genoa was not a direct consequence of cuts to the public budget, since the section of the highway is run by a private company, as centrist politicians and much of the major media jumped to point out. But Salvini’s broadside pinpointed an essential issue for Italy – and many other European countries – today: massive public investment is needed, but EU budget constraints prevent it.

Salvini: Leading the charge against Autostrade. (Wikimedia Commons)

The Italian government is responsible for the public welfare, but it is unable to guarantee that public welfare. There are many reasons for this, starting with the country’s massive public debt – 131 percent  of GDP, among the highest in the world – and the inefficiency of public spending. The construction tender process is slow and complicated, and tangled bureaucracy means that even money allocated is often left unspent for years.

These are long-term problems that require legislative reforms and the reorganization of priorities. The current government has promised to streamline the tender system, and also to direct available funds to the most urgent projects.

Yet the key factor that has slowed down basic infrastructure investment in Italy in recent years has been the EU budget rules, which after originally setting a maximum deficit of 3 of GDP, now make it mandatory to fully balance the budget, although countries are allowed to move gradually towards that goal.

The Italian government is constantly under pressure to cut public spending in order to get closer to a zero deficit every year. This, despite the fact that Italy has run a primary budget surplus (i.e. before interest on the public debt) practically every year since 1992. Public investment has fallen continually over the years; by more than one-third at the national level, down to 2% of GDP, and by as much as one-half over the past ten years when it comes to local governments.

This happened in particular because in order to meet the EU budget criteria, Italy adopted something called the “Internal Stability Pact,” to go along with the European “Stability and Growth Pact.” The internal version used the budgets of municipalities, provinces and regions to help reach national budget goals. In essence, the local authorities were required to cut spending even if they had money in the bank, so that the government in Rome could count those funds to meet the EU rules.

The harsh austerity implemented from 2011 to 2014 made things even worse. After the spread between Italian and German bonds on the financial markets spiked in the summer of 2011, leading to fears of financial catastrophe for Italy and the Euro system as a whole, technocratic governments rapidly moved to slash spending even more.

This policy, dictated by the European Central Bank and the European Commission and enthusiastically implemented by neoliberals in Italy, led to a true disaster. The result was a 25% drop in industrial production, and a sharp rise in unemployment and poverty. And not surprisingly – at least to rational people – the economic contraction ended up making the public debt even larger.

Who Should Decide?

When after the bridge disaster in Genoa the government promised to rebuild the country’s road infrastructure no matter what the cost, the reaction was swift. On the one hand, EU officials such as budget commissioner Guenther Oettinger denied Europe is responsible for lack of investment in Italy, and on the other, financial markets rapidly increased the risk premium on Italy’s state bonds.

The question is: why should financial markets or technocrats decide whether Italy’s roads are safe? The populist government was elected on the promise of challenging EU austerity policies, and the coalition agreement between M5S and the League sets two main priorities in this field: increasing public aid to the poor, through a form of universal income, and simplifying and lowering the country’s high tax rates, to help both businesses and individuals.

The main fight in the government right now is if they will actually carry through on these promises, despite the pressure to toe the line on the budget criteria. Economics Minister Giovanni Tria seems cowed by the pressure from the bond markets, and clearly fears antagonizing the EU. Di Maio and Salvini insist on keeping their promises, touting the heretical, but true, argument that productive investment actually produces growth. Something has to give. The hope is that it won’t be another bridge.

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Housing prices in the world’s premier markets – London, New York and Hong Kong, all of which were recently highlighted on the latest UBS ranking of cities with the largest housing bubble risk…

…. have finally started to retreat after years of unprecedented growth (a trend that can be attributed both to the stupefying price-to-income ratios facing local buyers and the Chinese government’s crackdown on capital outflows, among other factors).

But these pullbacks, which have mostly manifested over the past year, have had little, if any, impact on rates of homelessness, which have jumped in most urban centers (just look at Seattle). Given the tremendous public pressure for the government to do something to alleviate financial burdens on renters and aspiring buyers, UK Prime Minister Theresa May on Sunday became the latest politician to declare that something must indeed be done.

And that something, as Bloomberg and the Financial Times reported, is a proposed stamp tax on foreign buyers who don’t pay taxes in the UK, with the proceeds going to initiatives for rough sleepers (a slightly more dignified term for “the homeless”). The London proposal comes one week after officials in British Columbia promised a crack down on the “dirty money” (read Chinese buyers) that has helped make Vancouver’s housing market the most unaffordable in North America.

Meanwhile, in 2018 house prices in London declined more quickly than the broader UK market, a sign that property prices across high-end markets have peaked, and that homeowners are in for a punishing pullback.

FTSE-listed homebuilder stocks including Berkeley, Barratt and Taylor Wimpey were among the biggest losers on the first trading day of the quarter since their operations are concentrated in London, one of the most popular markets for foreigners. 

Here’s the FT with more:

Speaking at the Conservative Party conference on Sunday, Mrs May announced plans for buyers of UK property who do not pay tax in Britain to be subject to a new stamp duty surcharge of up to 3 per cent, with the proceeds going towards a scheme for tackling rough sleeping. The proposed tax would be levied on both individuals and companies.

While London house prices have been falling this year, they have risen at a rapid clip in recent years. The high number of luxury housing developments and of homes bought as investments that stand empty, particularly in the capital but also elsewhere in the country, have prompted calls for the government to tackle what is seen as a UK-wide housing crisis and build more affordable housing to accommodate the rising population.

Mrs May said there was evidence that foreign buyers who do not pay UK taxes had helped push up prices and reduce the rate of home ownership in the UK. When she became prime minister in 2016, she made solving Britain’s housing crisis a priority.

Of course, housing costs aren’t the only factor contributing to homelessness in the UK (austerity-related cutbacks have also played a role). But some analysts worry that May’s tax might be ill-timed as Britain tries to signal to the world that it’s still “open” to foreigners as Brexit looms.

“This policy, with its uncomfortable echoes of blaming foreigners for every ill, may make good headlines, but it sends an uncomfortable message to the rest of the world and will do nothing to create more homes for those unable to buy or to rent today,” said Henry Pryor, a U.K.-based luxury real estate broker.

Back when he was mayor of London, Boris Johnson said it would be “nuts” to deter foreign ownership in London, warning that it could trigger a precipitous collapse in home prices.

Still, there’s no denying that policies to beat back foreign buyers who have helped inflate property prices are politically popular. And with May’s grip looking increasingly tenuous thanks to her “Chequers plan” and her European partners unwillingness to give an inch in their negotiations over a Brexit deal, the timing of this announcement is hardly surprising.

Moving forward, if London cracks down on foreign buyers, other property markets like New York City could feel the sting as foreigners worry that “progressive” mayors like Bill de Blasio, who has already pushed through new disclosure laws applying to foreign property buyers, could follow suit. Such measures could risk exacerbating this latest decline in luxury markets, turning it into a full-fledged selloff with echoes of 2007.

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Authored by Alex Gorka via The Strategic Culture Foundation,

The Russian-Indian time-tested partnership has experienced an upward trend in all areas of cooperation in recent years. Last year, the two great powers marked the 70th anniversary of diplomatic relations. The leaders meet regularly and hold phone conversations to discuss acute problems. A very important event has just taken place to bring the two nations even closer.

The Indian Cabinet Committee on Security, chaired by PM Narendra Modi, approved the $6.2 billion S-400 Triumf deal with Russia on Sept.26. It’s rather symbolic that the final decision to purchase the five cutting-edge air defense systems to protect Indian critical infrastructure sites was taken just a few days before the Russian President Vladimir Putin’s visit to India scheduled on Oct.4-5. The Indian government defied the US threats to impose sanctions for buying Russian weapons in accordance with the 2017 “Countering America’s Adversaries Through Sanctions Act” (CAATSA) the way it did to “punish” China for buying the same systems and Su-35 combat planes.

The law allows making a waiver for India but US officials do not guarantee New Delhi will be exempt. It takes a risk by dealing with Russia. India has signed multiple multi-billion deals with US weapons producers. Defense Secretary James Mattis and State Secretary Mike Pompeo tried to talk India out of the S-400 deal during the 2+2 talks in September. Randall G. Schriver, Assistant Secretary of Defense for Asian and Pacific Security Affairs, has warned that a waiver is not a slam dunk decision. Indeed, if an exemption is made, others will demand waivers too, but with no sanctions imposed, the CAATSA will be deprived of any purpose. The US has put itself into an awkward situation and has to make a hard choice.

Russia and India are in talks on the way to make non-dollar payments. They could resort to clearing options, another currency, such as the Singapore dollar, or a go-between based in a third country. The US uses go-betweens to sell arms to the Syrian Kurds.

The two nations have a 60-year history of military cooperation, with Russia being the single largest supplier of hardware. The sides joined together to develop the BrahMos supersonic anti-ship and land-attack cruise missile. India also fields Russia’s S-300 air-defense system, and its INS Vikramaditya aircraft carrier is made in Russia and uses Russian aircraft.

The list of Russian weapons used by the Indian military is really long. India is finalizing negotiations with Russia to purchase 48 additional Mi-17-V5 utility helicopters. The agreement on the purchase of four frigates may be signed during the upcoming Russian-Indian October summit. New Delhi also wants to lease a Russian nuclear submarine

Moscow accounts for 62 per cent of New Delhi’s arms imports. The Russian weapons and equipment in the Indian inventory have to be maintained, modernized, and spare parts have to be supplied. India just couldn’t all of a sudden suspend the military cooperation with Russia even if it wanted to. But it doesn’t. It’s widely believed that the S-400s are the best in the world. Nobody else could offer India a system with comparable specifications. And no American sanctions can prevent the great power, such as India, from buying what serves better its national security interests.

The Indian government has been already criticized by opposition for getting too close to the United States. The general elections are in April-May 2019. Signing the deal during President Putin’s upcoming visit will be the right step to win voters’ support. India defies the US sanctions anyway by buying Iran’s oil. New Delhi continued to trade with Tehran during previous rounds of restrictions. The EU, Russia, China, and Iran have recently agreed to create a special purpose vehicle (SPV) to bypass US sanctions against Iran. Russia and India could do the same.

The two great powers are expected to conclude an ‘action plan’ for expanding civil nuclear energy partnership during the upcoming top-level meeting. It will focus on a second site for Russian nuclear plant in the country. Russia’s Rosatom is currently the only foreign investor in India’s civilian nuclear energy sector, with the first two 1,000W units of the Kudankulam power plant already commissioned. The site is scheduled to have six VVER-1000 reactors with an installed capacity of 1,000 MW each. In March, the trilateral agreement was signed by India, Russia and Bangladesh on nuclear energy-related cooperation in personnel training, experience sharing and consulting support.

Russia played a key role in facilitating India’s entry into the Shanghai Cooperation Organization (SCO), or Shanghai Pact, last year. It strongly supports India’s bid for a permanent seat in the United Nations Security Council and the Nuclear Suppliers Group (NSG).

No doubt, the October summit will re-affirm the fact that the traditionally close relationship has been upgraded to a “special privileged strategic partnership” as the world is shifting from a unipolar order to a possible multipolar structure. The decision to purchase the S-400 and defy the US exerting outright pressure proves the Indian government is adamant in its desire to boost cooperation with the old partner and friend. 

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China’s Shadow-banking system is collapsing (and with its China’s economic-fuel – the credit impulse), it’s equity market has become a slow-motion train-wreck, its economic data has been serially disappointing for two years, and its bond market is starting to show signs of serious systemic risk as corporate defaults in 2018 hit a record high.

But, if you were to read the Chinese press, none of that would be evident, as The New York Times reports a government directive sent to journalists in China on Friday named six economic topics to be “managed,” as the long hand of China’s ‘Ministry of Truth’ have now reached the business media in an effort to censor negative news about the economy.

The New York Times lists the topics that are to be “managed” as:

• Worse-than-expected data that could show the economy is slowing.
• Local government debt risks.
• The impact of the trade war with the United States.
• Signs of declining consumer confidence
• The risks of stagflation, or rising prices coupled with slowing economic growth
• “Hot-button issues to show the difficulties of people’s lives.”

The government’s new directive betrays a mounting anxiety among Chinese leaders that the country could be heading into a growing economic slump. Even before the trade war between the United States and China, residents of the world’s second-largest economy were showing signs of keeping a tight grip on their wallets. Industrial profit growth has slowed for four consecutive months, and China’s stock market is near its lowest level in four years.

“It’s possible that the situation is more serious than previously thought or that they want to prevent a panic,” said Zhang Ming, a retired political science professor from Renmin University in Beijing.

Mr. Zhang said the effect of the expanded censorship strategy could more readily cause people to believe rumors about the economy. “They are worried about chaos,” he added. “But in barring the media from reporting, things may get more chaotic.”

The directive didn’t appear to affect run-of-mill daily coverage of economic data, which could still be widely found online in China on Friday. Instead, the directive appeared to be aimed at easing the overall tone. Indeed, another notice sent on Friday instructed online news outlets to remove comments at the bottom of news articles that “bad-mouth the Chinese economy.”

One wonders if any “badmouthers” will automatically be accused of working for the Kremlin as is the case in the US, or simply arrested and never heard from again.

The topics that are now non grata pertain to “China’s economic downturn,” “China’s stagflation,” “new refugees,” “consumption downgrading” and “other harmful remarks that criticize the development prospects of China,” according to a copy of the notice reviewed by The Times. Consumption downgrading refers to Chinese consumers looking for ways to spend less.

What is ironic is that even before the crackdown, China’s data was already very much suspect. Mark Williams, chief Asia economist of Capital Economics, said the firm expects the Chinese economy to slow down to 5 to 5.5 percent from 6.9 percent last year. Despite the lower forecast, he stressed that it was “not a weak number” for the Chinese economy.

“One of the problems is there’s a lot of doubt about official Chinese data,” Mr. Williams said. “And when they come out with these directives, it just raises more questions.”

Censors have also erased online commentary that contained the phrases “consumption downgrade,” taxes, debt and unemployment, according to the Journalism and Media Studies Center at the University of Hong Kong, which monitors censorship on Weibo, China’s Twitter-like social media service.

One post that was removed by censors said: “The bad news in the market is exploding, pessimistic viewpoints are spreading, many retail investors are in despair.” Another read: “Will the emergence of robots free up labor or cause unemployment and poverty?”

And, as NYT notes, China is wasting no time in implementing the new directive.  On Wednesday, Phoenix News Media, a Hong Kong-based outlet with big operations in mainland China, said the Chinese authorities had instructed it to “rectify” its news portal, ifeng.com. The Cyberspace Administration of China, the country’s main internet regulator, said that Phoenix had “disseminated illegal and harmful information, distorted news headlines and shared news information in violation of rules.”

Two weeks earlier, NetEase, an online news portal, said it had to suspend updating its financial platform “because of serious problems.”

All of which is funny because in America, one can bash the economy, the deep state and the dysfunctional status quo all they want… as long as they are ready to be blacklisted as “Russian operatives”, get banned from YouTube and Twitter and watch their advertisers flee as a result of peer pressure. Meanwhile, if anyone asks what the true state of the economy is, the answer every single time is “just look at the stock market.”

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Via TargetLiberty.com,

The below essay by long-time political operative Roger Stone is the most important essay I have come across detailing how the Deep State has run counter-operations against Donald Trump, before he was elected president and since. In the essay, Stone also provides suggestions on how Trump should battle the DS.

The lesson here for libertarians is how government Deep State operatives often use laws created “to protect us”  to instead protect sectors of central power. The only way to stop these power plays is to eliminate the power centers by shrinking government.
–RW 

By Roger Stone

During the Presidential Campaign for the 2016 election, then Candidate Trump responded to the anguished cries of The People when he promised to “Drain the Swamp”.  While Donald J. Trump knew instinctively that there was rampant corruption in Washington, D.C., it is entirely possible that he was surprised by the levels of vindictiveness and wrath he would eventually encounter.

In a prescient and possibly complicit statement, on January 3, 2017, mere days from Trump’s inauguration, Senate Minority Leader Chuck Schumer warned the soon-to-be sworn-in President Elect. Schumer said that Donald Trump was being ”really dumb” to question US intelligence agency officials in their handling of the alleged “Russian Hacking” fabrications.  Schumer warned: “Let me tell you: You take on the intelligence community – they have six ways from Sunday at getting back at you,”.  With the benefit of hindsight, we see that the Obama corrupted FBI with assistance from the Obama corrupted CIA tried more than six different ways, and are still trying even now.

The Russian Collusion Delusion is a fairly complicated bit of political machinery.  That was by design.  It doesn’t take very much complexity to make most people’s eyes glaze over, which is why we have specialists for almost all complicated endeavors.  Engineers, programmers, chemists, doctors, and a multitude of others makes the fabric of our complex society.  It simply isn’t possible for anyone to become an expert in everything, and this is the principle upon which the Deep State’s coup d’état relies upon.  In order to comprehend what they have done, how they did it, and who they brought in to help them one has to consider so many variables that it forces any who choose to fully understand it to become experts themselves.  Most people don’t have the time or energy to become experts in political machinations and International intrigue, leaving the culprits free to continue exploiting the system.

Secrecy is the currency of spycraft.  Without secrecy, spying is merely intrusion and can devolve into brute force thuggery. Secrecy is what allows “Covert Operations” to remain covert.  Secrecy can be a legitimate tool of the State for securing the safety of its citizens, but secrecy can also be abused.  Abused secrecy can destroy entire nations.

In the case of the Russian Collusion FISA warrants against Carter Page, abused secrecy seems clearly to be what happened.  The rational for beginning the overt spying on the Trump Presidential Campaign appears to have begun with a completely fabricated opposition intelligence dossier concocted by Christopher Steele, formerly of British Intelligence M.I.6.   This fabrication, commissioned and paid for by Team Hillary, the DNC, and a complicit FBI, was used to kick-off a FISA investigation against Carter Page.  Due to Carter’s proximity to the Trump Campaign, and the NSA ‘hops’ surveillance method of total information awareness on a ‘target’, everyone within three degrees of separation from the target was surveilled.  Every single person in the Trump Campaign was spied on using Carter Page as the first ‘link’.  Although Carter may not have ever communicated directly with then Candidate Trump, Donald J. Trump himself was under surveillance because he communicated with people who communicated directly with Carter Page, making him just two-degrees of separation.  Since Trump himself was considered only a second-degree separation from Cater Page, it means that EVERY SINGLE PERSON that President Trump communicated with from the time the first FISA warrant was issued in October 2016 WAS ALSO BEING SURVEILLED until the third and final extension expired in October of 2017.  A full year of illegal spying, kept as an abused secret.  Rod Rosenstein was involved every step of the way, and was the final arbiter of the last FISA renewal.  While others are guilty, the buck stops with Rosenstein.

But spying wasn’t enough.  Spying is only useful for digging up dirt when the target of the spying is dirty.  No such dirt came up on President Trump, and any smaller fish caught up in Mueller’s drag nets had nothing to do with Russia, Collusion, or Team Trump.

When the initial fabrication fell flat, it became time for Plan B.  In this case, Plan B for the Deep State entailed entrapment.  Using a variety of lures and attack vectors, Team Deep State attempted to set-up and frame Trump campaign members like George Papadopoulos.  Knowing that their actions were highly illegal, the Coup Plotters opted to enlist their allies in British Intelligence to help them conduct operations on British soil, thereby skirting United States law.

It is easy to see that releasing the unredacted FISA applications and renewals will hurt Team Deep State.  We know how much pain they are in by the way they squeal.  It seems to physically cause them distress that they were ordered to release unredacted testimony from Bruce Ohr, and even more painful, the unredacted text messages of James Comey, Andrew McCabe, Peter Strzok, and Lisa Page.

Already the talking heads are making excuses for the Deep State and saying “oh, out of privacy some names will surely be redacted” or “we need to make sure their sources and methods are not compromised”. News Flash! Rampant criminal corruption which is plain as day to any and all sober minded patriots stares us in the face. It tells us clearly that “their sources and methods” are already gravely compromised and it requires bright sunshine and transparent clarity to fix it.

The old adage about sunshine being the best disinfectant definitely holds merit.

President Trump had the right instinct when he ordered the immediate declassification of the Russian Collusion Delusion documents.  He only agreed to delay the release because the DOJ threatened the President that releasing the unredacted documents could harm the Mueller Russia collusion investigations. To Team Deep State, harming the Mueller investigation is tantamount to committing the heinous crime of obstruction of justice.

Obstruction of justice, as defined in the omnibus clause of 18 U.S.C. § 1503, provides that “whoever corruptly or by threats or force, or by any threatening letter or communication, influences, obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice, shall be (guilty of an offense).”  Whoever corruptly influences the due administration of justice shall be guilty of obstruction of justice.

Cornell Legal Library notes that persons are usually charged under this statute based on allegations that a defendant intended to interfere with an official proceeding, by doing things such as destroying evidence, or interfering with the duties of jurors or court officers.  While defendants are usually the target of obstruction of justice charges, prosecutors can be equally guilty.

Other activities that also fall under the purview of obstruction of justice:  using the full force of United States Government law enforcement to create and disseminate fraudulent documentation which is then used to support a phony criminal investigation into a political opponent.  THAT is obstruction of justice, and worse, politicizing the entirety of the DOJ, FBI, and the CIA.  If this is what happened, and it appears increasingly likely that it is, then the guilty are multitude and the crimes almost beyond measure.

President Trump must stand strong on his original ultimatum:  the FISA and investigation documents must be released to the public!  The text messages must be revealed, without redactions!

A cornered animal is most dangerous. Removing the veil on Team Deep State’s secrecy is a mortal threat to their ability to continue their slow-motion soft coup against President Trump.  A successful coup is the only hope Team Deep State has at regaining control over the leavers of power wrested away from them by the President, so make no mistake, they are “All-In”.  They have even reached out to their partners in crime across the Atlantic at British Intelligence, who dutifully squealed “Grave Concerns” against releasing the unclassified and unredacted documents.  They know that within those documents are details on how Christopher Steele was involved in a brazen attempt to oust the duly elected President of the United States of America.  It is only natural that the British don’t want their M.I.6 guy named, or their frame-job set-up artist Stefan Halper revealed, but alas for them, it is too late.  Certainly, they don’t want it known that the British Government, at behest of the Obama Administration, allowed US directed agents to use British soil to conduct their skullduggery so as to circumvent US Law.  Should this prove to be the case, that is far beyond obstruction of justice, in the worst possibly way. It is conspiracy to defraud the US Government and US People, in addition to horrific rights violations of everyone victimized by this plot.   It also happens to be Treason and Seditious Conspiracy against the Duly Authorized United States Government, which are crimes carrying the potential for the highest of all penalties:  DEATH.

            18 U.S. Code § 2381 – Treason

Whoever, owing allegiance to the United States, levies war against them or adheres to their enemies, giving them aid and comfort within the United States or elsewhere, is guilty of treason and shall suffer death, or shall be imprisoned not less than five years and fined under this title but not less than $10,000; and shall be incapable of holding any office under the United States.

            18 U.S. Code § 2384 – Seditious conspiracy

If two or more persons in any State or Territory, or in any place subject to the jurisdiction of the United States, conspire to overthrow, put down, or to destroy by force the Government of the United States, or to levy war against them, or to oppose by force the authority thereof, or by force to prevent, hinder, or delay the execution of any law of the United States, or by force to seize, take, or possess any property of the United States contrary to the authority thereof, they shall each be fined under this title or imprisoned not more than twenty years, or both.

This cat is not going back into the bag and the public awaking will soon be ‘fait accompli’.

It has often been said that history repeats itself, so turning to history we find a quote from FDR’s first inaugural address, who may have found sardonic humor in our use of his quote today:

“This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper.”    March 4, 1933 Franklin Delano Roosevelt

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